3 Comments

1. 

   Larry Hanover

   January 30, 2012 at 8:01 am

   I believe that some form of a Tax Escrow System should be designed specifically for the HECM market. I understand that this would be complicated but should only be mandatory for the borrowers that fall into the lowest of incomes.
   Although not a good time for this suggestion due to current economic conditions and completely against my personnal beliefs HUD in combination with State and Local taxing bodies might figure out a system of tax credits to make up the difference in the short fall of a Seniors ability to pay for Tax and Insurance.

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2. 

   James E. Veale, CPA, MBT

   January 30, 2012 at 2:24 pm

   Without a specific change to HUD Handbook 4330.1 Section 13-12 A.1. escrow accounts are more fantasy than potential answer. We have heard much anecdotal evidence about how escrow accounts will work to cure the problem. Yet if one looks into the default situation in the forward industry where is the evidence that escrow accounts stop defaults for failure to pay.

   The NRMLA approach as presented in the letter to Ms. Hill on June 24, 2011 is an excellent starting point. It cannot possibly prevent all defaults but will be useful in preventing a large percentage of them. With several tweaks, the concepts presented in that letter on mandatory set asides have a lot of possibility for success.

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3. 

   Bill Danner

   February 1, 2012 at 1:07 pm

   The likelyhood of defaulting on taxes and insurance should be appreciable less with a HECM in place than left to their own devices. I think that it is mostly a function of how one closes on the loan.

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